Tempus fugit

Sheesh. Does anyone in this country actually work between noon on December 23rd and the morning of January 5th? Apparently not.

So what a grand time of year to get your financial stuff in order. Here are a few things to consider as you get over Mom’s Lethal Christmas Loaf and prepare for NYE.

Coming on Wednesday: the deadline to open a First Home Savings Account (FHSA) in order to qualify for $8,000 on contribution room. If you fail to do this, the room is lost (unlike with a TFSA where no account need be established). No, you don’t need eight grand – just a few bucks. The point is that by opening it you earn the right to carry forward that contribution room to 2026, when another eight may be added to it. Then you can ask your parents once for $16,000, instead of having to ask twice for two payments. So much more efficient.

Also next week: if you turned 71 in 2025 (Welcome to Thirsty Underwear Years!) any RRSP you have automatically croaks. The CRA can just declare it to be part of your taxable income, if action isn’t taken. Ouch. Big hit. That means converting it into a RRIF (registered retirement income fund), which is simple and quick – especially if you have an advisor looking after your accounts.

A RRIF can hold exactly the same stuff as the expiring RRSP, and conversion is not a taxable event. Nor does it cost anything. But it does mean that in 2026 you must start withdrawing a minimum amount as income (which is taxable). The rate is a low 5.28% of total RRIF value at age 71, rising to 6.82% at age 80, and topping out at 20% once you hit 95. The good news is that if you hold some decent ETFs in the account, they will probably generate enough growth to offset all withdrawals. So you can still be a greedy old snort at 100.

Coming Thursday: It’s TFSA day in our sweet Dominion, so you can chunk in another $7,000. The accumulated room since this thing was launched will be $109,000, or double that – a whopping $218,000 – for a couple (and spouses can contribute, without attribution). So, this is serious money, and those who started back in 2009, using growth assets like equity ETFs, are kicking it.

Remember that (unlike the FHSA) you ‘earn’ room in a TFSA just for being (a) a resident and (b) alive. So it’s possible to make up for missed contributions at any time. You can also remove money and then replace it in the next calendar year (can’t do that with an RRSP) – which means there are just three days left to do so in 2025 if you want the ability to replace those funds in 2026.

TFSA contributions can be made at any time during the year, of course, but the longer the money is inside the tax shelter (and invested, not saved) the greater the benefit from compounding. And remember that when you are ancient (like, 60) TFSA money can flow to you as retirement cash without being included in taxable income and therefore not impacting wrinklie pogey, like OAS. So, feed it.

Also next week: the new contribution room limits for retirement plans click in. For 2026 the max RRSP deposit jumps to $33,810, or 18% of whatever your earned income is during the year, to that limit. Unlike when you put money into a TFSA, the contribution into your retirement plan (as with the FHSA) is deductible from taxable income. That’s a massive incentive to utilize this tax shelter, along with the tax-free growth that generates inside it. You save on higher taxes now and benefit from paying a lower rate when the funds are accessed in retirement. A contribution between now and the beginning of March allows for that 2025 deduction.

As this pathetic blog has detailed with nauseating repetition, the RRSP is flexible, innovative and sexy. You can make a contribution with assets you already own, instead of cash. You can borrow to invest and use the tax refund to repay the loan. You can open an account for your spouse and yet reap the tax benefit yourself. You can stick a mortgage in there and make payments to yourself. And more.

Finally, time is almost gone for tax-loss selling. That’s the practice of taking your bow-wow securities and dumping them in order to claim a loss against capital gains in 2025. For Canadian assets, the deadline is Tuesday. For US stuff, the next day. Then you must wait thirty days (at least) to repurchase any of these things in order to avoid a ‘superficial loss’ penalty.

Yeah. Get busy.

About the picture: “Thanks for your relentless efforts to educate Canada on how to be smart and patient with their money,” writes Peter in Kitchener, “and stop foaming at the mouth over real estate. Lol. We enjoyed the Doggo pictures the other day, … a reminder that life is not complete without the love of a Dog. You may use the pic of our little angel Baylie in the blog again if you choose … she’s cleared it with her attorney and talent agent.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

Source: https://www.greaterfool.ca/2025/12/28/tempus-fugit-2/